It appears LePage is following the playbook used by many other Republican governors and endorsed by the Republican Governors’ Association and the Heritage Foundation. LePage is one of about a dozen Republican governors who are trying to reduce income tax rates while raising other taxes or generating revenue from other sources to balance their state budgets. Several of the GOP governors, including LePage, are using the “pathway to prosperity” language or concept to argue their case.

Not every Republican governor is playing along though. According to the Heritage Foundation, Iowa’s Terry Branstad, Michigan’s Rick Snyder, and Nevada’s Brian Sandoval are cutting their own path. Branstad and Snyder are both pushing for gas-tax increases without any offsetting tax cuts. Sandoval is proposing to raise business taxes to cover a 12 percent increase in state spending.

“And there’s going to be all that money available from nonprofits to go and look for donations. And I maintain that the good nonprofits who do good for the community are recognized and there’s going to be a flood of money going to them.”

How does LePage’s plan do this? Among other things, it lowers the income tax rate, requires nonprofits to pay property tax on property valued more than $500,000, and eliminates itemized deductions for charitable giving. It should be no surprise that several groans, perhaps of anguish and disbelief, could be heard from those in attendance in Westbrook, according to the Portland Press Herald.

Despite the bounding optimism of LePage and other Republican’s governors, the pathway to prosperity may have more than a few potholes. One big one is the lack of evidence to support the LePage administration’s contention that deductions for charitable giving will not matter to donors. Jon Bakija, professor economics at Williams College in Williamstown, Massachusetts, published a study in 2013 that showed that high-income people are probably quite responsive to the opportunity for tax incentives. The Congressional Budget Office reported similar findings in a 2011 report:

“Although the underlying motives for charitable giving are complex and not fully understood by economists, empirical studies generally find that taxpayers respond to the after-tax price of giving to some degree. Such tax incentives are limited, however, to the subset of taxpayers who itemize, and they favor high-income people, who face relatively higher marginal tax rates.”

The CBO report highlights that tax deductions for charity is one way the government subsidizes charities. When a taxpayer in the 25-percent bracket donates a dollar to charity, his or her taxes are reduced by 25 cents. Therefore, both the charity and the donor benefit from the tax deduction.

At this point, there appears to be no rush for Maine’s nonprofits to prepare for a “flood of money.” It remains unclear how the Maine legislature will respond to LePage’s tax and budget plan. In the meantime, nonprofits in Vacationland will continue to try to figure whether the governor’s plans are real or mere trickery and illusion.—Tom Klaus

Tom Klaus, PhD is a nonprofit consultant specializing in leadership, program, and organizational development as well as research and evaluation. His clients include local, statewide, regional, and national organizations. He has extensive experience with community engagement, intractable controversy management, nonprofit board development and strategy planning, and the management of government funded health and human services grants and projects that are national in scope. In addition to his consulting practice, he has also managed the creation, development and testing of the Roots to Fruit of Sustainable Community Change model (R2F) with a colleague from the University of Iowa. The R2F model integrates the Collective Impact Five Conditions with other salient theoretical frameworks to present a measurable approach to producing long-term community change. Tom Klaus is also an adjunct professor at Eastern University (Philadelphia) in the School of Leadership Development and Ph.D. in Organizational Leadership programs and a frequent keynote speaker and workshop leader.
From 2005 to 2013 Tom was Director of Capacity Building & Sustainability at Advocates for Youth in Washington, DC. During that time he served as a project director and as a technical assistance (TA) provider for a Centers for Disease Control and Prevention (CDC) funded teen pregnancy prevention project. In the role of project director he managed the daily work of the project. As a lead TA provider he created and provided organizational and leadership development training, coaching, materials, and support to local, state, regional and national organizations on a variety of issues, including controversy management, project and organizational sustainability, collaborative partnerships, and organizational change. From 2010 to 2013 Tom led the development of an innovative community mobilization and sustainability framework that is being used by the CDC in its teen pregnancy prevention grantee sites across the United States.
Tom Klaus came to Advocates for Youth in December, 2005, from his home state of Iowa, where he had been the executive director and a founding board member of Iowa’s statewide teen pregnancy prevention organization; a developer and master trainer of several teen pregnancy prevention programs that were replicated nationally; a writer of numerous articles and curricula; a youth worker and counselor; and had held local, state, regional, national, and international leadership positions in both religious and public service organizations.
Tom has written award winning and award nominated books on adolescent issues for religious publishers. He has also traveled throughout the United States as a speaker in hundreds of schools, colleges, and conferences on topics related to teen pregnancy prevention, adolescent sexual health, male involvement in teen pregnancy prevention, and organizational leadership and change.
Tom Klaus is an alumnus of the Greater Des Moines Leadership Institute and a trained facilitator in Appreciative Inquiry, an asset-based change and development model for organizations. He has also received training in the fundamentals of Dynamic Governance, a sociocratic approach to organizational leadership and management. Tom earned degrees in religion and English at William Penn University, a Master of Science degree in counseling from Drake University, and the Doctor of Philosophy in Organizational Leadership (Nonprofit Concentration) at Eastern University.
In 2013 Tom began a consulting practice, Tom Klaus & Associates, which is focused on partnering with nonprofit leaders to build greater organizations and programs for good. He is also adjunct faculty in Eastern University's School of Leadership Development and Ph.D. in Organizational Leadership program. Tom's doctoral research examined leadership in an intractable conflict over sexuality education in public schools in the United States. Other recent research and consulting work has included community engagement, reflective leadership, program and organizational sustainability, intractable conflict management, leadership development and coaching, organizational analysis, and board development. Tom is currently working toward accreditation as a leadership and executive coach with MentorCoach LLC and certification by the International Coaching Federation.
Tom Klaus is known by his colleagues and clients as an authentic transformational leader; an innovative and focused strategic thinker and planner; a creative problem-solver; a talented trainer, teacher, and motivational speaker; an award-winning writer of numerous books, popular press articles, and professional research publications; and an effective relationship builder with a warm and engaging personality, appreciative management style, and a keen, quirky sense of humor. Tom is also an avid (though not great) ballroom dancer; a frequent (though not often enough) dog walker to his miniature schnauzers; and a practicing (though not perfect) Quaker.